Mortgage rates fall 30-year loans at all-time low of 3.13%

Long-term U.S. mortgage rates fell this week as the benchmark 30-year home loan reached a new all-time low.

Mortgage buyer Freddie Mac reported Thursday that the average rate on the key 30-year loan declined to 3.13% from 3.21% last week. It was the lowest level since Freddie began tracking average rates in 1971. A year ago, the rate stood at 3.84%.

The average rate on the 15-year fixed-rate mortgage eased to 2.58% from 2.62%.

In recent weeks, signs have pointed to the economy appearing to be slowly recovering from the devastation of the coronavirus pandemic, with more businesses partially reopening. The housing market has shown strength and robust home-buying demand, but it may be difficult to sustain because of the tight supply of homes available for sale, said Freddie Mac chief economist Sam Khater.

The outlook for the economy and housing will be affected by prospects for a vaccine for the virus and government relief measures and policies, Khater noted.

In response to falling interest rates, mortgage applications have increased for 11 straight weeks and hit the highest level in more than 11 years in the week ending June 12, according to data from the Mortgage Bankers Association.

“The housing market continues to experience the release of unrealized pent-up demand from earlier this spring, as well as a gradual improvement in consumer confidence,” Joel Kan, MBA’s associate vice president of economic and industry forecasting, said in a statement.

The record low mortgage rates led to a 10% surge in refinance applications.

“Refinancing continues to support households’ finances, as homeowners who refinance are able to gain savings on their monthly mortgage payments in a still-uncertain period of the economic recovery,” Kan said.